North Am. Van Lines v. STATE BD. OF TAX COM'RS
| Citation | 590 F. Supp. 311 |
| Decision Date | 03 January 1984 |
| Docket Number | Civ. No. F 83-6. |
| Parties | NORTH AMERICAN VAN LINES, INC., Plaintiff, v. STATE BOARD OF TAX COMMISSIONERS OF the STATE OF INDIANA, et al., Defendants. |
| Court | U.S. District Court — Northern District of Indiana |
Thomas M. Moorhead and Thomas M. Shoaff, Shoaff, Parker & Keegan, Gerald A. Burns, Fort Wayne, Ind., for plaintiff.
Dan S. LaRue, Deputy Atty. Gen., Indianapolis, Ind., for defendants.
On November 18, 1983, plaintiff filed its "Motion for Summary Judgment." Defendants timely filed a response on December 8, 1983 to which plaintiff responded on December 13, 1983. Upon full briefing of the pending motion, this court held a hearing on December 15, 1983. Because the defendants had alluded to the possibility that this court should abstain from further adjudication of this matter pending the outcome of somewhat duplicative proceedings in a state court, this court directly inquired into that issue at the hearing. At the close of the aforementioned hearing, the court invited the parties to submit post-hearing briefs on the issue of abstention within one week from the date of the hearing. Plaintiff filed its memorandum relating to abstention on December 22, 1983. Defendants have, to date, failed to further brief the issue. Notwithstanding defendants' failure to further brief the abstention issue, this court is inclined to abstain from present resolution of the matter and stay further adjudication of the federal claims pending the outcome of the state court proceedings. This order is entered to set forth the reasons for that decision. Prior to reaching the legal issues involved, an overview of the facts is in order.
The essential facts underlying this litigation are not in dispute. They are as follows. Plaintiff, North American Van Lines (hereinafter NAVL) operates motor carrier transportation property in interstate and intrastate commerce. Its operating situs, and principal place of business, is in Washington Township, Allen County, Indiana. Defendants include the State Board of Tax Commissioners and various members of that Commission, the Indiana Department of State Revenue and the Commissioner of that Department.
Plaintiff's complaint arises from the Indiana Legislature's decision to change the tax status of interstate motor carriers which changed certain carriers' liability for state taxes. The change, embodied in Public Law 66 (I.C. 6-1.1-8-2 through 6-1.1-8-35, hereinafter P.L. 66), was enacted in 1981 and became effective January 1, 1982. It is plaintiff's position that this change in the tax structure violates, inter alia, 49 U.S.C. § 11503(a); Article I, section 8, clause 3 of the United States Constitution; Article X, section 1 of the Constitution of the State of Indiana; Article VI, section 2 of the Constitution of the United States; and section 1 of the fourteenth amendment to the United States Constitution.
In order to fully understand plaintiff's arguments, some review of the change in the tax laws is necessary. Prior to enactment of P.L. 66, plaintiff's interstate motor carrier transportation property, which, so far as relevant includes its tractors and trailers, like most personal property in Indiana, was taxed pursuant to I.C. 6-1.1-3-1, et seq. Under the prior scheme of things, plaintiff's property, particularly its tractors and trailers, were taxed at rates which varied from one taxing unit to another. Since plaintiff operated in interstate commerce and was based in Washington Township, Allen County, plaintiff received the benefits of what is, apparently, a generally lower tax rate than the tax rate for the State of Indiana overall.
The enactment of P.L. 66, however, changed things, much to the dismay of present plaintiff. P.L. 66 imposes an ad valorem tax on the "indefinite — situs distributable property" (which includes tractors and trailers) of each interstate motor carrier company operating in the State of Indiana. Under the new law, taxes on an interstate motor carrier company's indefinite — situs distributable property is assessed according to mileage and the tax rate imposed is based upon the average personal property rate for the entire State of Indiana. Simply put, the tax rate under P.L. 66 is determined by taking the total property tax for each individual taxing unit in Indiana during a given year and dividing that figure by the total net assessed valuation of property in Indiana for the preceding year's assessment.
Herein lies the difference which makes a difference as far as present plaintiff is concerned. Under the prior law, it was taxed in accordance with the rates assessed in Washington Township, Allen County. Now, plaintiff is taxed on a state-wide average. It is plaintiff's position that it has been discriminated against because it must pay a tax which is greater because of the fact that it operates in interstate commerce. This, of course, in plaintiff's view, violates the various state constitutional, federal constitutional, and federal statutory provisions enumerated before.
While arguably conceding that the taxing scheme violates some of the provisions of federal law, defendants allude to the fact that this court should abstain from deciding this issue because a parallel claim has been filed in a state court. Though plaintiff, and not defendants, has chosen to brief the issue, the court is of the view that the better approach is to defer further consideration pending the outcome of the state court determination.
The pending state court proceeding revolves around a decision of the Hendricks Circuit Court, State of Indiana, entered on April 20, 1983 in Private Truck Council of America v. John Huie, et al., Cause No. CV 882-361. The final judgment, which found P.L. 66 to be in violation of both the federal constitution and the state constitution, is presently on appeal to the Indiana Supreme Court.
In the state court, the judge certified a class action wherein the plaintiffs were interstate motor carriers all of whom were based outside the State of Indiana. The defendants were the State Board of Tax Commissioners, the Department of State Revenue and individual members of the Board and Department. The complaint filed in the state court charged that P.L. 66 was violative of 49 U.S.C. § 11503(a), Article I, section 8, clause 3 of the Constitution of the United States, Article X, section 1 of the Constitution of the State of Indiana, and Amendment 14, section 1 of the Constitution of the United States. The court found that P.L. 66 was unconstitutional because it violated the Commerce Clause and further because it violated Article X of the Indiana Constitution.
Present plaintiff does not view the action in this court and the one in the Hendricks Circuit Court as being parallel proceedings. Many reasons are given for distinguishing the two cases, however, two are of primary importance. First, while many of the defendants are the same, and the goals in both proceedings are the same, the plaintiffs fall into two distinct categories. In the state court proceeding, the plaintiffs are comprised of interstate motor carriers based outside of the State of Indiana. Here, there is a singular plaintiff which operates an interstate motor carrier based entirely within the State of Indiana. Second, plaintiff asserts that while section 11503(a) was pled in the state court proceeding that court did not consider or rule upon the applicability of that statute and thus this court should address the applicability of section 11503(a).
As indicated, the state court decision declaring P.L. 66 unconstitutional is presently upon appeal to the Indiana Supreme Court. During the pendency of the state court proceedings, the plaintiffs in the state court action and present plaintiff have deposited the disputed taxes in an escrow account under the control of the Indiana Department of Revenue.
In discussing the doctrine of abstention, two basic and somewhat interrelated notions must be kept in mind. First, "federal courts are obligated to exercise the jurisdiction conferred upon them by Congress and the Constitution." Bally Mfg. Corp. v. Casino Control Commission, 534 F.Supp. 1213, 1215 (D.N.J.1982). "Thus, the exercise of jurisdiction is the rule; abstention is the `extraordinary and narrow exception.'" Id., quoting Colorado River Water Conservation District v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976). The second principle "is that of comity within the federal system, a principle that rests in an uneasy tension with the previous one." Bally, supra, at 1216.
"There are three general categories of abstention, as well as a fourth category that is closely related to abstention, but is not, properly speaking, a type of abstention." Turf Paradise, Inc. v. Arizona Downs, 670 F.2d 813, 815 (9th Cir.1982). As stated by the United States Supreme Court:
Colorado River, supra, 424 U.S. at 814-16, 96 S.Ct. at 1244-46. Respectively, these three types of abstention are commonly referred to as Pullman abs...
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